Age of the Ikea 'Big Box Store' is OVER: Flatpack furniture giants say smaller city centre stores in Britain are its future amid rising property taxes
Ikea bosses say they are looking at opening more compact shops after being impressed by strong openings of such sites in Brighton and London's Hammersmith.
By MARK DUELL, SENIOR REPORTER
Published: 08:53 GMT, 2 January 2026 | Updated: 08:54 GMT, 2 January 2026
Since Ikea arrived in Britain nearly 40 years ago, the furniture retailer has focused on attracting customers to megastores where they can buy just about anything.
But the Swedish business has found success in recent years with smaller city centre stores – and has now revealed its plans to shift further towards these.
Peter Jelkeby, the outgoing chief executive of Ikea's UK and Ireland arm, said the company will stop new 'big box' openings as property taxes continue to rise.
Bosses are looking at opening more compact shops after being impressed by strong openings of such sites in Brighton and London's Hammersmith, reported The Times.
Ikea also wants to expand to retail parks with scaled-down stores that are bigger than the city centre shops but smaller than the classic out-of-town warehouse stores.
Three such 'city stores' were opened in Harlow, Norwich and Chester last year – giving Ikea a total of 26 sites in the UK, 20 of which are defined as major stores.
Mr Jelkeby was asked whether the shift was partly designed to ease Ikea's exposure to business rates, and replied: 'We of course want to have lower business rates.'
It comes as thousands of supermarkets and department stores are expected to be hit hardest by changes to property taxes which come into force in three months' time.
Ikea Hammersmith was opened in the Livat shopping centre in West London in February 2022
The Ikea in Hammersmith features a cafe, which became its first ever UK high street restaurant
Bigger stores have suffered a significantly bigger tax bill for years because of their size and location attracting far higher rateable values than faced by smaller premises.
This divide is expected to widen from April, when a new business rates surcharge of up to 10p on properties with a rateable value (RV) of £500,000 or more is brought in.
The Government has previously said it wants 'to level the playing field for the high street', but the burden will rise on supermarkets and department stores.
Mr Jelkeby, who is now set to take charge of Ikea in Germany, called for reforms to 'come sooner rather than later [so] the climate for retail can be positive'.
It comes after Ikea closed a megastore in Tottenham, North London, in 2022 after 17 years amid a switch to smaller, more central locations – including the three-floor Oxford Street store which opened last May.